In common view, budget means the estimation of expenses and incomes. Same way, the Union Budget is a statement of estimated receipts and expenditures of the Government of India. Government has to spend a heavy amount on heavy industries, infrastructure, internal and external security, education, employment generation, health, transportation etc. To meet the above requirements, the Government has to raise funds from various sources by imposing various direct and indirect taxes and borrowings from the market.
Thus, a Budget is a statement of estimated receipts and borrowings and expenditures during a financial year. Financial year for Budget purpose, is from April,1 to March, 31.
The receipts and payments of Government of India, are shown in following three parts:-
- Consolidated Fund: No amount can be withdrawn from the fund without the authorization of the Parliament.
- Contingency Fund: It is like an imprest and the fund can be utilized with the permission of the President of India.
- Provident Fund: These funds are the small savings of public, Therefore, that fund does not belong to the government of India.
FEW IMPORTANT TERMS RELATING TO THE BUDGET
Revenue Budget:- All the tax revenues and other revenues are shown under this head. All the expenditure are met out of these revenues.
Tax Revenues:- It shows all the receipts from the taxes and other duties levied by the government of India.
Other Revenues:- It consists of interest and dividend on investments made by government, fees and receipts for other services by government of India.
Revenue Expenditure:- This part contains all the routine expenditures of government. Interest paid on the borrowing (not for capital assets) is shown in this head. All the subsidies and grants to States are also the part of revenue expenditures. Please note that not expenditure which create an assets, shall come under revenue expenditure.
Capital Receipts:- Loans from public, borrowing from Reserve Bank of India and other parties through sale of Treasury bills, loans from foreign bodies, State and Union territory governments and other parties.
Capital Payments:– All expenditures for acquisition of land, buildings, machinery, equipments, investment in shares etc., loans and grants to State and Union Territory Governments, corporations, Government companies and other parties are shown under this head.
Demand for Grants:- The demands in respect of estimates expenditures by each ministry or department, are passed by Lok Shabha. Normally the demands are made only once in a year by the ministries.
Finance Bill:- The proposals of government for levy of new taxes, modification of existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament are submitted to Parliament through this bill.
Finance Act:- When the finance bill is passed by Lok Shabha and Rajya Shabha and finally it is signed by the President of India, then it becomes the Finance Act.
Budget Deficit:- means total of capital and revenue receipts minus total of revenue expenditures and capital expenditures.
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